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for outstanding research assistance and to Jérôme Vandenbussche, Ursula Vogel, and Enrica Detragiache for sharing their data. The views in this paper are those of the authors and do not necessarily represent the views of any institution with which they are affiliated. cross-border bank FX borrowing by more than half. At the same time, corporates increase FX debt issuance by about 10% of median annual FX debt issuance for the full sample, equivalent to a 15%-20% increase in FX corporate debt issuance for countries such as Brazil and Indonesia. Overall, our findings inform the policy debate on macroprudential regulations and highlight the need to assess their full impact on the economy.

Have bank regulatory policies and unconventional monetary policies -and any possible interactions -been a factor behind the recent 'deglobalisation' in cross-border bank lending? To test this hypothesis, we use bank-level data from the United Kingdom -a country at the heart of the global financial system. Our results suggest that increases in microprudential capital requirements tend to reduce international bank lending and some forms of unconventional monetary policy can amplify this effect. Specifically, the United Kingdom's Funding for Lending Scheme (FLS) significantly amplified the effects of increased capital requirements on external lending. Quantitative easing may also have had an amplification effect, but these estimates are usually insignificant and smaller in magnitude. We find that this interaction between microprudential regulations and the FLS can explain roughly 30% of the contraction in aggregate UK cross-border bank lending between mid-2012 and end-2013, corresponding to around 10% of the contraction globally. This suggests that unconventional monetary policy designed to support domestic lending can have the unintended consequence of reducing foreign lending.

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